Penn Central RailroadThe Penn Central Railroad was an American railroad company, headquartered in Philadelphia, Pennsylvania and formed by the merger in 1968 of the Pennsylvania Railroad and the New York Central Railroad; the New Haven was added to the merger at the insistence of the ICC. The driving force behind the creation of the Penn Central was the perilous financial situations of all three railroads in the late 1960s.
Although the decline of the north-eastern US railroads had many causes, increasing competition from the trucking industry, subsidised by the federally-funded highway system, was one of the greatest of them, as was their inability to respond to market conditions.
Railroads of the time were heavily regulated and were unable to change the rates they charged shippers or the fares they charged passengers. Therefore, reducing costs was the only way to become more profitable. Government regulation and agreements with labor unions tightly restricted what cost-cutting could take place. Merger was a promising way out.
As it turned out, the merged railroad was no better off than its constituent roads were before. Attempts to integrate operations, personnel and equipment were not very successful, due to the clashing corporate cultures. Attempts were made to diversify into real estate and other non-railroad ventures, but these turned into more of a distraction from the problems in the core business than a cure for them.
In only two years, the Penn Central declared bankruptcy in what was then the largest corporate bankruptcy in American history. The railroad was kept running while efforts were made to save it. Salvation came, finally, in nationalisation under the Railroad Revitalization and Regulatory Reform Act of 1976; the state-owned corporation Conrail was formed to take over the railroad assets of the bankrupt Penn Central and five other failed railroads in the north-eastern United States. Further help was given by the 1980 Staggers Act, which deregulated the railroad industry.
The successor to Penn Central's non-rail assets is American Financial Group, which as of 2003 still exists.